FINANCIAL FACTS AND FIGURES.

Auckland Star, Volume XXXIX, Issue 103, 30 April 1908, Page 3

FINANCIAL FACTS AND FIGURES.

(By FINANCIER.) AIARINTE IN'SUEAN'CE. The figures of the ten leading marine offices for the year 1307, disclose some interesting features, and shed light on the business of underwriting, which is not in the general knowledge of marine companies' clients. First of all, it must be borne in mind that insurance has, in the course of its evolution, tended to monopoly. The ten great English companies whose figures are to be presently dealt with, are the most powerful in the marine class —they practically dominate all others in this line of business, dictating, as it were, the policy and rules which insurers have to accept. With long experience behind them, and hoarded wealth in the shape of large reserve funds, these companies failed to make their business, as a whole, payable. The principal causes for the unsatisfactory results shown are, the heavy losses made on war risks during the Japanese-Ruaso engagements. Then the insurance of hulls, in face of the launching of newtonnage, was most disappointing. Shipowners carried more of their own risks than ever before, passing the cover which the marine companies had on offer. Further came a shrinkage in the general volume of international trade, both in value and quantity. This is made clearer by the tigures for 1906. The total income from marine premiums of the ten companies was £2.703.079. and for 1907 £2.707.83.5; just a trifling increase of £4750 in a turnover of two and three-quarter millions! Tne increase shown discloses stagnation of trade indeed. Worse than all is the fact that for 190t5 a net loss of £76.950 was made. Only four of the ten companies made profits from their underwriting, the other six companies made heavy losses with above net result. Pome time must elapse before the results for 1907 are known. Risks have to run off. but indications point to a very much worse experience than that of the year pre-vio'-is. The shareholders in these companies received their dividends as usual, but these were earned from the reserve funds, which had been accumulated in former prosperous years. The funds. apart from capital. total £5.918.015. They earned £22:5.020. and enabled the payment of dividends amounting to £214.561 for year 1907. Two large marine offices have been absorbed by other leviathan companies. : The Standard was acquired by the London and Lancashire Company, while the . business of the Ocean Company, showing | a profit for 1906. and a revenue from i marine premiums for 1907 of £ 162.156. is | absorbed by the North British. Com- , petition ever results in combination and , monopoly, so insurers may expect higher ' premium rates and a harder contract in ! the future. . WHEAT MARKETS. j A review of the year 1907 in this 1 connection i. ; of more than passing inj terost. The Dominion has a distinct conI cern in the features of that year. The | factors which have accounted for the i fluctuations in prices are instructive; for they go to prove how much producers I have to depend on circumstances over I which they have no control, j Two strong advances in price took" j place in 1907. The first was fully dei veloped by the end of May. the market I having advanced 6/. to. 7/- per quarter. I Following this the market eased, and : then began advancing again, until in I October a further increase of 6/- more than May was reached, leaving on the j average prices higher than 1906. viz.. 11 - , to 13 - per quarter. These prices were I the result of relying on crop, harvest, i and consumption estimates. As crop and ! harvest reports pointed to a shortage I of about 45,000.0(50 quarters. besides j which the estimate of consumption gave indication of a large increased supply being needed to equalise matters, dealers | and specula tors' operations quickly sent ! prices rising. The estimates, however. i J proved at fault. Supplies came forward ' ' from America. Argentine, and Knssia. re--1 moving all fear of short shipments. The; ' j Americans found wheat as good as rrold ia their exchange operations. Other ' : countries, too. eagerly met the rising i ! markets, and it was found that on the - ! practical test of supply and demand, the 1 information which swayed the dealers [\ was faulty in many respects. By the end of February prices showed a drop of 7/6 :■ to 10 - per quarter, as it was felt sup1 ' plies were quite large enough for any i demand. 4 . Official statistics for the purposes of - ne?;t harvestag will now be in process I of preparation. It is to ho hoped that | they will prove more reliable in results. 1 Whatever market prices may resolve I themselves into, the outcome is always | better for the general good, when such ! prices are based on th" solid ground of [ j supply and demand. The cornering of ! I supplies and market manipulations rarely i | benelit the producer: they always bear hardly on the consumer. Our Dominion J i farmers, as it fortunately turned out, - derived considerable profit from the - last flutters in wheSl. SOME FEATURE? FROM THE BANK RETURNS, i i First, assets exceed liabilities in the • Dominion by £4J60,000. which is an im- '. provement of great importance. It di - -' closes the fact that the Bank of New ; Zealand has at last quit advancing the j people's money to London borrowers. j This is indeed a timely move, and will I go far to strengthen confidence, now c I that wool and flax prices have depressed '.'. - the former feeling of buoyancy which - ruled so lons. The avenues inviting 1 I safe and profitable business in the c j Dominion were lost sight of. whUe the a j Bank could shovel £5.000.000 into Lon- :> don for the use of borrowers there, or '■' for temporary investments. We expect the next balancAsheet of the Bank i- will disclose the heavy reduction of »' money loaned ia Loudon. _ Deposits, free and interest-bearing, tort tal £21.08.3,573. as against £21,044.093 it twelve months ago. The increase shown is only £44.480. The increase for !g March." 1907. was £2.035.914—a differ - g ence of nearly two millions. This proves c a temporary stoppage in the large ac- _ u cumulations which former years dis,e close. The drop in wool and flax ac- ' counts for the major portion of the >l " adverse movement. The immediate ,'j results may be a general hardening of .c the rate of interest, but not to any great is extent; for the day of the land specu--5,5 lator is now at an end. Money will be _ advanced for the aid of better interests. •y The pastoralist. fanner and manufacturs" er must have preference in borrowing. | They will, in using the money, increase wealth and products —a feature which is absent from the work of mere land speculating. This country's financial condition is yet too young to stand the j' racket of land gambling. It thrives g well, however, on land developing. The f- money diverted from land speculations 1= will flow back again to the Banks. Once more deposits will increase, making

further available capital to aid true wealth development. Coin and bullion is £4,975,60S —an increase of £376,000. This is veryhealthy indeed, especially when the large increase of advances is considered. The latter is £3,083,750. Last year advances increased £1,559,723; so that the present review shows a hundred per jent advance. The Bank of New Zealand takes pride of place here, being responsible for £1.790.000, or more than half of the total of the combined Banks doing business in the Dominion. Note -•ireulation has decreased £7,000, and this shows the effect of the shrinkage in butter production during the quarter ended. Finally, while our banking has lost some of its Imperial character, it his gained by being more domestic in habits —more compact, and more concerned with our growing interests; therefore safer for depositors.